Hutcheson v. City of Keizer

• Decision Date: 30 August 2000
• Citation: 169 Or. App. 510,8 P.3d 1010
• Parties: Harold and Betty HUTCHESON, husband and wife; Jim and Anne Trimble, husband and wife; and Tim and Deanna Tornow, husband and wife, Respondents—Cross-Appellants, v. CITY OF KEIZER, a municipal corporation, Appellant—Cross-Respondent, and Multi/Tech Engineering Services, Inc.; Tran Co.; C.A.W.S., Inc.; and Lawrence T. Epping and Jeanette T. Epping, dba Granada Land Company, Defendants.
• Court: Oregon Court of Appeals

8 P.3d 1010

169 Or. App. 510

Harold and Betty HUTCHESON, husband and wife; Jim and Anne Trimble, husband and wife; and Tim and Deanna Tornow, husband and wife, Respondents—Cross-Appellants, v. CITY OF KEIZER, a municipal corporation, Appellant—Cross-Respondent, and Multi/Tech Engineering Services, Inc.; Tran Co.; C.A.W.S., Inc.; and Lawrence T. Epping and Jeanette T. Epping, dba Granada Land Company, Defendants.

(97C-10988; CA A102696)

Court of Appeals of Oregon.

Argued and Submitted January 20, 2000.

Decided August 30, 2000.

Robert E. Franz, Jr., Springfield, argued the cause for appellant—cross-respondent. On the briefs was Kathryn D. Piele.

Norman R. Hill, Salem, argued the cause and filed the briefs for respondents—cross-appellants.

Before HASELTON, Presiding Judge, and WOLLHEIM and KISTLER, Judges.

HASELTON, P.J.

Defendant, City of Keizer (the City), appeals from a judgment for plaintiffs, homeowners, on a negligence action arising out of the flooding of the Country Glen Estates subdivision in 1996. The City contends, inter alia, that it was immune from liability pursuant to the discretionary function immunity provision of the Oregon Tort Claims Act (OTCA), ORS 30.265, and that the court erred in giving a "less satisfactory evidence" instruction. Plaintiffs cross-appeal, asserting that the court improperly applied the OTCA in limiting their recovery. On appeal we conclude that, although the trial court correctly denied the City's motion for a directed verdict on its defense of immunity, the court erred in giving plaintiffs' requested "less satisfactory evidence" instruction. That error was not harmless; consequently, we reverse and remand for a new trial. Our disposition of the appeal moots the cross-appeal.

The following facts are undisputed: In December 1993, real estate developer Lawrence Epping submitted a "Subdivision Application" to the City. The application requested approval of Epping's plan to divide a 66-acre parcel into 190 residential lots and develop it as the Country Glen Estates subdivision. A public hearing on the application was held, and the city hearings officer issued an order approving the subdivision subject to certain conditions relating to, among other things, the developer's submission of an "engineering site plan" to both the Department of Public Works and the Community Development Department for "review and approval." Epping's engineer submitted the site plan and related documents to the City and, upon administrative approval, development of the Country Glen Estates subdivision proceeded as planned.

Plaintiffs Betty and Harold Hutcheson purchased lot 74 in the Country Glen Estates subdivision, and they moved into their house in October 1995. Plaintiffs Anne and Jim Trimble and Jim and Deanna Tornow bought lots 65 and 70, and had moved into their new homes by early February 1996. All three lots are located in one of the two cul-de-sacs on the southern edge of the subdivision, which borders on the Labish Ditch, a manmade drainage canal. The two cul-de-sacs on which plaintiffs' properties are located lie at an elevation slightly below that of the Labish Ditch.

In early February 1996, the Salem-Keizer area was inundated with unusually heavy rainfall. On February 5, the water in the Labish Ditch began to overflow its banks. The Trimbles were forced to evacuate their home, which was the closest in proximity to the Labish Ditch, on February 7. The next day, the water continued to rise, and the Tornows and Hutchesons were eventually forced to evacuate their homes as well. By February 13, the waters had receded, and plaintiffs returned to their homes. At the time, plaintiffs believed that the February flood was an extraordinary nonrecurring natural disaster caused by the unusually heavy rains. However, ten months later, on December 31, 1996, the Labish Ditch again overflowed its banks and again flooded plaintiffs' homes.

In March 1997, plaintiffs brought this negligence action against the City to recover damages for the depreciation of their homes and the value of personal property destroyed or damaged in the two floods.¹ Plaintiffs' complaint alleged five specifications of negligence under the general theory that the City was negligent "in failing to use reasonable care in reviewing [Epping's] subdivision application and supporting documentation and in approving [Epping's] subdivision and allowing residential development of the subject property with homes now owned by Plaintiffs."²

The case was tried to a jury over two weeks in February and March of 1998. At the close of all evidence, the City moved for a directed verdict, arguing that plaintiffs had failed to prove each specification of their negligence claim and, alternatively, that, pursuant to ORS 30.265, "the decisions made by the City of Keizer through its engineer, William Peterson, are entitled to and should be afforded [discretionary] immunity."³ The trial court denied City's motion.

The jury returned a general verdict for plaintiffs, concluding that the City was 30 percent negligent and that the two other co-defendants, 169 Or.App. at 513 n. 1, 8 P.3d at 1012 n. 1, were each 35 percent at fault. The jury awarded the Trimbles total damages of $256,939.15, the Tornows total damages of $80,432.35, and the Hutchesons total damages of $41,810. The City subsequently moved for an order reducing the verdict in favor of the Trimbles to $50,000, on the ground that the OTCA limited the City's liability to a maximum of $50,000 per claimant for any single accident or occurrence, ORS 30.270, and reducing the verdict in favor of the Hutchesons to "the amount of demonstrable equity" the Hutchesons had in their home. The trial court granted the City's motion and entered judgment against the City for the Trimbles for $50,000, for the Tornows for $24,129.70, and for the Hutchesons for $9,501.05.

On appeal, the City asserts 13 assignments of error. Because of our ultimate disposition, we address, primarily, the City's fourth assignment of error, challenging the trial court's denial of the City's motion for a directed verdict on its defense of discretionary immunity, and the City's twelfth assignment of error, which asserts that the court erred in giving the jury the "less satisfactory evidence" instruction. On cross-appeal, plaintiffs assign error both to the trial court's application of the OTCA damages limitation to reduce the Trimbles' recovery to $50,000, and to the trial court's reduction of the verdict in favor of the Hutchesons. Given our disposition, plaintiffs' cross-appeal is moot.

The City's contention that it was immune from liability is potentially dispositive—i.e., if the City is correct, it is entitled to outright reversal and not merely (as with other assignments of error) a remand for a new trial. Consequently, we begin with the court's denial of a directed verdict for the City on its defense of discretionary immunity.

ORS 30.265(3) provides, in part:

"Every public body and its officers, employees and agents acting within the scope of their employment or duties, * * * are immune from liability for:

"* * * * *

"(c) Any claim based upon the performance of or the failure to exercise or perform a discretionary function or duty, whether or not the discretion is abused."

The City argues that plaintiffs' negligence claim arises from the City's approval of the subdivision application; that that approval by a hearings officer was a "discretionary" act; and, thus, that the City is entitled to discretionary immunity under ORS 30.265. The City particularly invokes J. Gregcin, Inc. v. City of Dayton, 39 Or.App. 743, 593 P.2d 1231, rev'd on other grounds, 287 Or. 709, 601 P.2d 1254 (1979), for the proposition that government approval of a subdivision application, and "any decision related thereto," is an exercise of discretion.⁴ In the City's view, approval of a subdivision should be viewed as one overarching policy decision, and every smaller decision that is part of that approval process—even ostensibly "ministerial" decisions—is protected by discretionary immunity. Plaintiffs respond that the object of their negligence claim was not the hearings officer's approval of the subdivision application. Rather, plaintiffs assert that the conduct that gave rise to their negligence claim was the subsequent (i.e., post-approval) "failure of City staff to review" the "construction plans or drainage basin calculations submitted by developer." Plaintiffs assert that such post-approval conduct by City staff partakes of "ministerial," not "discretionary," functions.

We agree with plaintiffs. Although their specifications of negligence were framed, and phrased, broadly,⁵ their evidence and arguments— the substance of the case as it was actually tried and submitted to the jury—demonstrate that plaintiffs' negligence claim ultimately rested on the conduct of two City employees, William Peterson, the City engineer, and Wally Mull, the City's public works director. As amplified below, that conduct—Peterson's and Mull's action and inaction—did not involve the exercise of discretion. In explaining that conclusion, we recount the evidence describing Peterson's and Mull's functions in the subdivision application process.

At trial, John Morgan, the City's community development director, explained that the City's subdivision application procedure entails the following sequence of events: (1) Upon receiving an application to subdivide property, the Community Development Department sends a notice of a public hearing to nearby property owners and requests comments from affected agencies. (2) The Community Development Department develops a staff report analyzing whether and how the proposed subdivision meets the land use and zoning criteria required by local ordinance. (3) A public hearing on the proposal is held before the city hearings officer. There is opportunity for public comment, and the Community Development Department submits its staff...